Title VII contains a specific exemption from its religious discrimination prohibitions for religious organizations. For years, this provision has been interpreted to prevent religious discrimination claims against such organizations involving hiring or firing decisions based on a person's religious beliefs. Last week, the Fourth Circuit Court of Appeals (which includes North Carolina and South Carolina) expanded this exemption to include claims of religious harassment and retaliation.

In Kennedy v. St. Joseph's Ministries, the plaintiff was a nursing assistant at a Catholic nursing-care facility. Her personal religious beliefs required her to wear long dresses and skirts and to cover her hair at all times. When the facility informed the plaintiff that her clothing was inconsistent with their policy and with Catholic practices, she refused to agree to any change and was terminated. She sued, claiming religious discrimination harassment and retaliation.

The Fourth Circuit considered only the viability of the harassment and retaliation claims. The plaintiff contended that title VII's religious organization exemption only applies to actual hiring and firing decisions, and not to other prohibited behavior based on religion. In a 2-1 decision, the Fourth Circuit disagreed, broadly reading the exemption to apply to any religious claims brought under Title VII. The court said that "employment" means the breadth of the relationship, not just hiring and firing.

The court also concluded that this interpretation is consistent with the exemption's intent to avoid claims against religious organizations based on their devotion to doctrinal practices. To decide otherwise would allow such organizations to fire employees, but not to take any lesser steps to reach a compromise on acceptable practices. The dissent did not challenge the majority's substantive findings, but stated that the appeal should be dismissed on procedural grounds.

Based on this decision, religious organizations in the Fourth Circuit appear to have blanket protection from claims that religious beliefs or practices affect any aspect of the working relationship. This decision does not apply to claims of race, gender or other discrimination, harassment or retaliation claims against religious organizations beyond their core ministerial functions.